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PREDICTING THE POTENTIAL BANKRUPTCY OF COAL MINING COMPANIES USING ALTMAN Z-SCORE METHOD DURING 2012-2016 PERIOD
Corresponding Author(s) : Rihfenti Ernayani
Humanities & Social Sciences Reviews,
Vol. 8 No. 1 (2020): January
Abstract
Purpose of the study: This study aimed to determine and predict potential bankruptcy in coal mining companies listed in Indonesia Stock Exchange (IDX) period 2012-2016.
Methodology: This study to using the Altman Z-Score method, with five (5) ratios, namely Working Capital to Total Asset, Retained Earnings to Total Assets, Earning before interest and tax to total assets, Market Value of Equity to Book Value of Debt, and Sales to Total Assets. The ratio of working capital to total assets (X1) is a ratio of liquidity which measures the extent of working capital that is used to finance the total assets.
Main Findings: The result showed, by the Z-Score value in 2016 from the coal mining companies studied, four companies fall in the category of potential bankruptcy, three companies in the grey area, and four in the healthy category.
Applications of this study: Data sources in this study were coal mining companies listed on the Indonesia Stock Exchange (IDX) for the period 2012-2016.
Novelty/Originality of this study: There are 11 coal mining companies taken as sample based on purposive sampling. The result shows, by the Z-Score value in 2016 from the coal mining companies studied, four companies fall in the category of potential bankruptcy, three companies in the grey area, and four in the healthy category.
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- Almeida, H., & Philippon, T. (2007). The riskâ€adjusted cost of financial distress. The Journal of Finance, 62(6), 2557–2586. https://doi.org/10.1111/j.1540-6261.2007.01286.x DOI: https://doi.org/10.1111/j.1540-6261.2007.01286.x
- Altman, E I, Brenner, M., & Eisenbeis, R. A. (1977). Zeta Analysys A New Model to Identify Bankruptcy Risk of Corporations. Journal of Banking and Finance, June, 29–54. https://doi.org/10.1016/0378-4266(77)90017-6 DOI: https://doi.org/10.1016/0378-4266(77)90017-6
- Altman, Edward I. (2013). Predicting financial distress of companies: revisiting the Z-score and ZETA® models. In Handbook of research methods and applications in empirical finance. Edward Elgar Publishing. https://doi.org/10.4337/9780857936097.00027 DOI: https://doi.org/10.4337/9780857936097.00027
- Arista, T. W. (2016). Analisis diskriminan altman z-score untuk memprediksi kebangkrutan pada perusahaan ritel go public.
- Banks, J. M. (2004). The technology of lowâ€fat cheese manufacture. International Journal of Dairy Technology, 57(4), 199–207. https://doi.org/10.1111/j.1471-0307.2004.00136.x DOI: https://doi.org/10.1111/j.1471-0307.2004.00136.x
- Boulila, H., Benbouziane, M., Sakanko, M. A., David, J., Djulius, H., Ahmed, F., Awais, I., Kashif, M., Syamni, G., & Majid, M. S. A. (n.d.). Determinants of Inflation in the Local Economy Jaka Sriyana Austerity in Time of Crisis: a Solution or a Dangerous Idea? Evidence from Algeria.
- Cao, Y., Myers, J. N., Myers, L. A., & Omer, T. C. (2015). Company reputation and the cost of equity capital. Review of Accounting Studies, 20(1), 42–81. https://doi.org/10.1007/s11142-014-9292-9 DOI: https://doi.org/10.1007/s11142-014-9292-9
- Elloumi, F., & Gueyie, J.-P. (2001). Financial distress and corporate governance: an empirical analysis. Corporate Governance: The International Journal of Business in Society, 1(1), 15–23. https://doi.org/10.1108/14720700110389548 DOI: https://doi.org/10.1108/14720700110389548
- Ernayani, R., Robiyanto, R., & Sudjinan, S. (2017). Factors influencing profit distribution management of sharia commercial banks in Indonesia. Journal of Economics, Business & Accountancy Ventura, 20(2), 187–192. https://doi.org/10.14414/jebav.v20i2.1055 DOI: https://doi.org/10.14414/jebav.v20i2.1055
- Ernayani, R., & Sari, O. (2017). The effect of return on investment, cash ratio, and debt to total assets towards dividend payout ratio (a study towards manufacturing companies listed in Indonesia stock exchange). Advanced Science Letters, 23(8), 7196–7199. https://doi.org/10.1166/asl.2017.9328 DOI: https://doi.org/10.1166/asl.2017.9328
- Gerald, I., White, S., Ashwinpaul, C., & Fried, D. (2003). AIMR Annual Report Supplement to Accompany The Analysis and Use of Financial Statements. John Wiley & Sons.
- Harmono, H. (2017). Relationship between macroeconomic fundamentals, bank’s credit scheme, firm’s performance and firm’s value dimensions. Jurnal Keuangan Dan Perbankan, 21(1), 82–95. https://doi.org/10.26905/jkdp.v21i1.1229 DOI: https://doi.org/10.26905/jkdp.v21i1.1229
- Irfan, M., & Yuniati, T. (2014). Analisis Financial Distress dengan Pendekatan Altman Z–Score untuk Memprediksi Kebangkrutan Perusahaan Telekomunikasi. Jurnal Ilmu & Riset Manajemen, 3(1), 1-18
- Liou, D. K. (2007). Macroeconomic Variables and Financial Distress. Journal of Accounting, Business & Management, 14.
- Mann, P., Sun, L., & Sternbach, C. (2015). Emerging Trends From 114 Giant Oil and Gas Fields Discovered From the Decade 2008–2017. AAPG Hedberg Conference, The Evolution of Petroleum Systems Analysis.
- Marcelina, T. A., & Yuliandari, W. S. (2014). Prediksi Kebangkrutan Menggunakan Metode Z-Score Dan Pengaruhnya Terhadap Harga Saham Pada Perusahaan Transportasi Yang Terdaftar Di Bursa Efek Indonesia Tahun 2008-2012. EProceedings of Management, 1(3).
- Meyer, P. A., & Pifer, H. W. (1970). Prediction of bank failures. The Journal of Finance, 25(4), 853–868. https://doi.org/10.1111/j.1540-6261.1970.tb00558.x DOI: https://doi.org/10.1111/j.1540-6261.1970.tb00558.x
- Onyskow, G. A. (2014). Analisis rasio keuangan untuk memprediksi kebangkrutan perusahaan (Survei Pada Perusahaan Tambang Batubara yang Terdaftar di Bursa Efek Indonesia Tahun 2011-2012). Universitas Widyatama.
- Penman, S. H. (2007). Financial reporting quality: is fair value a plus or a minus? Accounting and Business Research, 37(sup1), 33–44. https://doi.org/10.1080/00014788.2007.9730083 DOI: https://doi.org/10.1080/00014788.2007.9730083
- Platt, H. D., & Platt, M. B. (2002). Predicting corporate financial distress: reflections on choice-based sample bias. Journal of Economics and Finance, 26(2), 184–199. https://doi.org/10.1007/BF02755985 DOI: https://doi.org/10.1007/BF02755985
- Pratama, D., & Yulianto, E. (2016). Analisis Nilai Tukar Rupiah, Produksi Batubara, Permintaan Batubara Dalam Negeri Dan Harga Batubara Acuan Terhadap Volume Ekspor Batubara Indonesia (Studi|| pada Ekspor Batubara Indonesia Tahun| 2005-2014). Jurnal Administrasi Bisnis, 33(2), 145–153.
- Scott, W. R. (2000). Financial Accounting Theory. Canada: Prentice Hall.
- Subramanyam, K. R., & Wild, J. J. (2010). Analisis Laporan Keuangan (financial statement analysis). Jakarta: Salemba Empat.
- Suharman, H. (2007). Analisis Risiko Keuangan untuk Memprediksi Tingkat Kegagalan Usaha Bank. Jurnal Imiah ASET, 9(1).
- Sukristono. (1992). Perencanaan strategis bank. Lembaga Pengembangan Perbankan Indonesia.
- Sun, L. (2007). A re-evaluation of auditors’ opinions versus statistical models in bankruptcy prediction. Review of Quantitative Finance and Accounting, 28(1), 55–78. https://doi.org/10.1007/s11156-006-0003-x DOI: https://doi.org/10.1007/s11156-006-0003-x
- Syamni, G., Majid, M. S. A., & Siregar, W. V. (2018). Bankruptcy Prediction Models and Stock Prices of the Coal Mining Industry in Indonesia. Etikonomi: Jurnal Ekonomi, 17(1). https://doi.org/10.15408/etk.v17i1.6559 DOI: https://doi.org/10.15408/etk.v17i1.6559
- Tong, S., Junarsin, E., & Davidson, W. (2013). A comparison of Chinese state-owned enterprise firm’s boards and private firm’s boards. Proceedings of 23rd International Business Research Conference 18-20 November, 2013 Melbourne, Australia. Retrieved From.
- Toto, P. (2011). Analisis laporan keuangan teori dan aplikasi. Jakarta: PP.
- Triyono, D. (2017). The effect of foreign stock indexes and Indonesia’s macroeconomics variables toward Jakarta Composite Stock Price Index (JCI). Advanced Science Letters, 23(8), 7211–7214. https://doi.org/10.1166/asl.2017.9332 DOI: https://doi.org/10.1166/asl.2017.9332
- Utama, C. A., & Sulistika, M. (2015). Determinants of investment opportunity set (degree of internationalization and macroeconomic variables). Gadjah Mada International Journal of Business, 17(2), 107. https://doi.org/10.22146/gamaijb.6905 DOI: https://doi.org/10.22146/gamaijb.6905
- Van Horne, J. C., & Wachowicz, J. M. (2000). Fundamentals of financial management. FINANCE INDIA, 14(2), 621–622.
References
Almeida, H., & Philippon, T. (2007). The riskâ€adjusted cost of financial distress. The Journal of Finance, 62(6), 2557–2586. https://doi.org/10.1111/j.1540-6261.2007.01286.x DOI: https://doi.org/10.1111/j.1540-6261.2007.01286.x
Altman, E I, Brenner, M., & Eisenbeis, R. A. (1977). Zeta Analysys A New Model to Identify Bankruptcy Risk of Corporations. Journal of Banking and Finance, June, 29–54. https://doi.org/10.1016/0378-4266(77)90017-6 DOI: https://doi.org/10.1016/0378-4266(77)90017-6
Altman, Edward I. (2013). Predicting financial distress of companies: revisiting the Z-score and ZETA® models. In Handbook of research methods and applications in empirical finance. Edward Elgar Publishing. https://doi.org/10.4337/9780857936097.00027 DOI: https://doi.org/10.4337/9780857936097.00027
Arista, T. W. (2016). Analisis diskriminan altman z-score untuk memprediksi kebangkrutan pada perusahaan ritel go public.
Banks, J. M. (2004). The technology of lowâ€fat cheese manufacture. International Journal of Dairy Technology, 57(4), 199–207. https://doi.org/10.1111/j.1471-0307.2004.00136.x DOI: https://doi.org/10.1111/j.1471-0307.2004.00136.x
Boulila, H., Benbouziane, M., Sakanko, M. A., David, J., Djulius, H., Ahmed, F., Awais, I., Kashif, M., Syamni, G., & Majid, M. S. A. (n.d.). Determinants of Inflation in the Local Economy Jaka Sriyana Austerity in Time of Crisis: a Solution or a Dangerous Idea? Evidence from Algeria.
Cao, Y., Myers, J. N., Myers, L. A., & Omer, T. C. (2015). Company reputation and the cost of equity capital. Review of Accounting Studies, 20(1), 42–81. https://doi.org/10.1007/s11142-014-9292-9 DOI: https://doi.org/10.1007/s11142-014-9292-9
Elloumi, F., & Gueyie, J.-P. (2001). Financial distress and corporate governance: an empirical analysis. Corporate Governance: The International Journal of Business in Society, 1(1), 15–23. https://doi.org/10.1108/14720700110389548 DOI: https://doi.org/10.1108/14720700110389548
Ernayani, R., Robiyanto, R., & Sudjinan, S. (2017). Factors influencing profit distribution management of sharia commercial banks in Indonesia. Journal of Economics, Business & Accountancy Ventura, 20(2), 187–192. https://doi.org/10.14414/jebav.v20i2.1055 DOI: https://doi.org/10.14414/jebav.v20i2.1055
Ernayani, R., & Sari, O. (2017). The effect of return on investment, cash ratio, and debt to total assets towards dividend payout ratio (a study towards manufacturing companies listed in Indonesia stock exchange). Advanced Science Letters, 23(8), 7196–7199. https://doi.org/10.1166/asl.2017.9328 DOI: https://doi.org/10.1166/asl.2017.9328
Gerald, I., White, S., Ashwinpaul, C., & Fried, D. (2003). AIMR Annual Report Supplement to Accompany The Analysis and Use of Financial Statements. John Wiley & Sons.
Harmono, H. (2017). Relationship between macroeconomic fundamentals, bank’s credit scheme, firm’s performance and firm’s value dimensions. Jurnal Keuangan Dan Perbankan, 21(1), 82–95. https://doi.org/10.26905/jkdp.v21i1.1229 DOI: https://doi.org/10.26905/jkdp.v21i1.1229
Irfan, M., & Yuniati, T. (2014). Analisis Financial Distress dengan Pendekatan Altman Z–Score untuk Memprediksi Kebangkrutan Perusahaan Telekomunikasi. Jurnal Ilmu & Riset Manajemen, 3(1), 1-18
Liou, D. K. (2007). Macroeconomic Variables and Financial Distress. Journal of Accounting, Business & Management, 14.
Mann, P., Sun, L., & Sternbach, C. (2015). Emerging Trends From 114 Giant Oil and Gas Fields Discovered From the Decade 2008–2017. AAPG Hedberg Conference, The Evolution of Petroleum Systems Analysis.
Marcelina, T. A., & Yuliandari, W. S. (2014). Prediksi Kebangkrutan Menggunakan Metode Z-Score Dan Pengaruhnya Terhadap Harga Saham Pada Perusahaan Transportasi Yang Terdaftar Di Bursa Efek Indonesia Tahun 2008-2012. EProceedings of Management, 1(3).
Meyer, P. A., & Pifer, H. W. (1970). Prediction of bank failures. The Journal of Finance, 25(4), 853–868. https://doi.org/10.1111/j.1540-6261.1970.tb00558.x DOI: https://doi.org/10.1111/j.1540-6261.1970.tb00558.x
Onyskow, G. A. (2014). Analisis rasio keuangan untuk memprediksi kebangkrutan perusahaan (Survei Pada Perusahaan Tambang Batubara yang Terdaftar di Bursa Efek Indonesia Tahun 2011-2012). Universitas Widyatama.
Penman, S. H. (2007). Financial reporting quality: is fair value a plus or a minus? Accounting and Business Research, 37(sup1), 33–44. https://doi.org/10.1080/00014788.2007.9730083 DOI: https://doi.org/10.1080/00014788.2007.9730083
Platt, H. D., & Platt, M. B. (2002). Predicting corporate financial distress: reflections on choice-based sample bias. Journal of Economics and Finance, 26(2), 184–199. https://doi.org/10.1007/BF02755985 DOI: https://doi.org/10.1007/BF02755985
Pratama, D., & Yulianto, E. (2016). Analisis Nilai Tukar Rupiah, Produksi Batubara, Permintaan Batubara Dalam Negeri Dan Harga Batubara Acuan Terhadap Volume Ekspor Batubara Indonesia (Studi|| pada Ekspor Batubara Indonesia Tahun| 2005-2014). Jurnal Administrasi Bisnis, 33(2), 145–153.
Scott, W. R. (2000). Financial Accounting Theory. Canada: Prentice Hall.
Subramanyam, K. R., & Wild, J. J. (2010). Analisis Laporan Keuangan (financial statement analysis). Jakarta: Salemba Empat.
Suharman, H. (2007). Analisis Risiko Keuangan untuk Memprediksi Tingkat Kegagalan Usaha Bank. Jurnal Imiah ASET, 9(1).
Sukristono. (1992). Perencanaan strategis bank. Lembaga Pengembangan Perbankan Indonesia.
Sun, L. (2007). A re-evaluation of auditors’ opinions versus statistical models in bankruptcy prediction. Review of Quantitative Finance and Accounting, 28(1), 55–78. https://doi.org/10.1007/s11156-006-0003-x DOI: https://doi.org/10.1007/s11156-006-0003-x
Syamni, G., Majid, M. S. A., & Siregar, W. V. (2018). Bankruptcy Prediction Models and Stock Prices of the Coal Mining Industry in Indonesia. Etikonomi: Jurnal Ekonomi, 17(1). https://doi.org/10.15408/etk.v17i1.6559 DOI: https://doi.org/10.15408/etk.v17i1.6559
Tong, S., Junarsin, E., & Davidson, W. (2013). A comparison of Chinese state-owned enterprise firm’s boards and private firm’s boards. Proceedings of 23rd International Business Research Conference 18-20 November, 2013 Melbourne, Australia. Retrieved From.
Toto, P. (2011). Analisis laporan keuangan teori dan aplikasi. Jakarta: PP.
Triyono, D. (2017). The effect of foreign stock indexes and Indonesia’s macroeconomics variables toward Jakarta Composite Stock Price Index (JCI). Advanced Science Letters, 23(8), 7211–7214. https://doi.org/10.1166/asl.2017.9332 DOI: https://doi.org/10.1166/asl.2017.9332
Utama, C. A., & Sulistika, M. (2015). Determinants of investment opportunity set (degree of internationalization and macroeconomic variables). Gadjah Mada International Journal of Business, 17(2), 107. https://doi.org/10.22146/gamaijb.6905 DOI: https://doi.org/10.22146/gamaijb.6905
Van Horne, J. C., & Wachowicz, J. M. (2000). Fundamentals of financial management. FINANCE INDIA, 14(2), 621–622.